The U.S. Securities and Exchange Commission (SEC) voted in favour to adopt a consolidated audit trail (CAT) on Tuesday that would replace the existing system of reporting to various self-regulatory organizations (SROs) in a bid to enhance oversight of the U.S. equity and options markets.

The national market system plan was jointly submitted by the national securities exchanges and the Financial Industry Regulatory Authority (FINRA) to create a single, comprehensive database to track all of the trading activity on the equity and options markets.

The SEC altered several aspects of the plan in response to public comments and recommendations from the SROs. For example, the SEC strengthened the data security requirements, tightened the clock synchronization standards for SROs, revised the governance plan and accelerated the deadline for the SROs to submit proposals to retire their existing data reporting systems to reduce the burden on broker-dealers of reporting to multiple systems.

Within two months of the plan’s approval, the SROs must select an organization to build and operate the CAT. The SROs will be required to begin reporting to the CAT within one year of its approval, with large broker-dealers required to report the next year, and small broker-dealers the year after that.

“With the approval and ultimate implementation of CAT, the commission’s regulatory capacity strongly embraces 21st century technology, enabling the commission and the SROs to harness data and technology to more effectively oversee market participants,” says SEC chairwoman Mary Jo White in a statement.

“Through the CAT, regulators will have more timely access to a comprehensive set of trading data, enabling us to more efficiently and effectively conduct research, reconstruct market events, monitor market behavior and identify and investigate misconduct,” she adds.